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Downsizing & Wanting to Relocate?

While nearly half of Canadian homeowners don’t plan to sell their homes when they retire, 34% are still unsure what they’ll do. Moving to a new city or downsizing to a more compact home can offer advantages, but depending on your goals, depending on your goals, a few disadvantages as well. If you’re thinking about a post-retirement move, consider these pros and cons before you start packing:

When you relocate to a new city or property:

Pro: Save money on daily expenses: if you relocate to a less expensive area, you’ll be able to stretch your retirement savings further. Consider the benefits of a suburb vs. city, and look to exotic areas that provide a lower cost of living. Mexico, Panama and Costa Rica are popular post-retirement spots for Canadians. Or, look to Buenos Aires, Argentina, where you can rent a one-bedroom apartment for only $400 a month.

Con: Spend money on moving costs: even if you’re exchanging your current home for a less expensive property, moving isn’t cheap—real estate agent expenses, land transfer tax and moving costs can dissolve a big chunk of money. For example, in Toronto its estimated that land transfer costs, legal fees and moving expenses alone would equal more than $18,000. Plus, you’ll have to consider the cost of traveling to visit family and friends, but if you pick a tropical locale, Canadian friends and family may be more likely to come visit you.

When you downsize to a condo or rental unit:

Pro: Save time with maintenance help: tired of shoveling snow and cutting grass? Move into an apartment building, condo or town home. Many building owners will take care of property maintenance for a monthly fee. A significant number of homeowners over 65 choose to sell their homes, preferring to rent instead. According to the Canadian Mortgage and Housing Corporation, 78% of those 55 to 64 own property compared to only 68% of those 75 and older.

Con: Spend time to downsize belongings: condensing decades worth of personal belongings, furniture and other items isn’t easy—one possible reason a recent survey found that nearly half (43%) of Baby Boomers who want to move don’t want to switch to a smaller home. If you declutter now, you’ll have less to clean and organize during retirement.

Pro: Increase your available funds: a study found that the average Canadian thinks they need $908, 000 for a decent retirement. By selling your home, buying a less expensive one with the profits, and then investing the leftover cash, you can boost your pre-retirement financial status. Downsizing to a smaller, less costly home may even help you retire earlier by your amount of available funds.

Con:Decrease your available equity: if you stay put, your home equity could potentially provide a back-up plan should you run out of savings. You could borrow against the equity you’ve built in your home with a home equity line of credit—just be sure you can make your monthly loan payments. Equity could also help fun a retirement home stay, where monthly fees range from $1,453 to $3,204 a month.

Century 21 Canada Limited Partnership currently has franchise opportunities available in select markets across Canada. The intent of this communication is for informational purposes only and is not intended to be a solicitation to anyone under contract with another real estate brokerage organization. CENTURY 21® is a registered trademark owned by Century 21 Real Estate LLC, used under license. ® Trademarks of AIR MILES International Trading B.V. Used under license by LoyaltyOne, Inc. and Century 21 Canada Limited Partnership.

Certain listing content on this website has been provided by The Canadian Real Estate Association. The compilation of such Listing Content is owned by The Canadian Real Estate Association and/or its member Boards and Associations and licensed to Century 21 Canada Limited Partnership.